SMM Weekly Forecast on China’s Silicon Market

SHANGHAI, Sep. 30 (SMM) – Supply: The energy conservation and emission reduction policy and the upcoming low-water period will be the main factors limiting production of silicon metal in 4Q. SMM estimates that operating rates at domestic silicon metal producers in September is lower than 70%, and domestic silicon metal supply is in surplus. However, goods flow in domestic silicon spot market keeps tight during September, given large-size traders’ heavy hoarding and China Customs’ sealing up of goods due to some domestic exporters’ misrepresentations for low-grade silicon metal. 

Demand: In the wake of improving global economy, industrial output of each country is also growing steadily. Aluminum alloy industry maintains stable demand for silicon metal, and increases in silicon metal prices have limited impacts on its costs. In addition, organic silicon and polysilicon industries belong to emerging industries, and are developing rapidly, with promising outlook. Therefore, SMM expects that downstream demand for silicon metal in 4Q will continue to rise mildly. 

At present, warehouses at Huangpu port, the largest trading port for silicon metal in China, are keeping heavy stocks. In addition, stocks in warehouses in Kunming, Yunnan are also approximately full. Since heavy stocks do not mean good orders among downstream producers, prices of domestic silicon metal will be depressed once the stocked goods flood into the spot market.

However, market players keep certain confidence of higher silicon metal prices in 4Q, given uncertainties of China’s energy conservation and emission reduction policy and approach of the low-water period. 

Movements of domestic silicon metal market during the last quarter of the eleventh Five-Year Plan are still unknown. SMM expects that prices in domestic spot silicon metal will stabilize or fall slightly.

SMM expects that mainstream traded prices at Huangpu port will be around RMB 13,600/mt for # 553 silicon metal; around RMB 14,400/mt for # 441 silicon metal; around RMB 14,900/mt for #3303 silicon metal; and around RMB 15,400/mt for # 2202 silicon metal after the National Day holiday. 

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